Musings on leadership, management, strategy, economics, philosophy, and current affairs.

09/23/2009

Summer of 2009 is behind us and now it is time for businesses to plan for the next year. This is the time when most of the management time is invested in formulating strategies, both short-term and long-term. All levels of the management are active during these sessions to contribute in the process. I have found that many times people get lost when some words such as 'vision', 'strategy', 'execution' and the likes are used in such brainstorming sessions, due to which the businesses may be devoid of some good ideas that may come from unexpected lower level source.

Simply put, one starts with 'target/s' (aka vision / goal / objectives). Decides what to do (aka strategy) to achieve the target. And then during the given time frame gets it done (aka execution).

My friend 'targeted' to spend his summer vacations in Spain. He (along with his wife) decided the airline, hotel, daily care for their pet dog during their absence, and back up arrangement in their respective offices - thus, formulated the 'strategies'. They did as they planned and also adjusted in between the vacation due to an unexpected call from one of the dear ones - thus, they executed the strategy and also adjusted mid-course based on the situational demand.

In my experience such simple examples strikes a cord with most of the people, which increases their participation which in turn increases the inputs (badly needed by any business).

09/22/2009

Recently I was referred to a service named as Evernote, which is a great service to save emails, receipts, web clippings, and pictures. One can click picture of business cards and transfer it to 'Evernote', which in turn will recognize the text on it. Its compatibility with mobile phones will make utilization limited only by imagination. Some of the excellent tips for its use are offered by Guy Kawasaki and Jennifer Van Grove.

09/15/2009

One basic premise that runs through most of the self-help books is the Western philosophy of 'law of attraction'. I am not against this philosophy but it seems incomplete to me as I believe that certain principles need to be followed for law of attraction to work and there is a limit to the power of thought beyond which one has to surrender. I do not fully believe in the Eastern philosophy either, which places excessive importance on pre-determined destiny. I believe that one can find some answers in the Eastern philosophy and some in the Western philosophy. A blended philosophy might be a better idea and that is what the author Chin-Ning Chu has tried to achieve in her book Think Face, Black Heart. She has not over emphasized the role of destiny or power of thought, but placed an equal importance to both.

Beginning of the book is quite provocative as author suggest 'winning at all costs' and harboring of 'negative thoughts'. But once I was through first three or four chapters the bigger picture started to become clearer, and by the time I was finishing the book it was clear to me that this book warrants another reading within a week.

09/11/2009

A Case Study of Utilitarian Income Redistribution, by Harvard economist N. Gregory Mankiw, Weinzierl proposes the optimal taxation on height. The idea of taxation based on the height of a person instead of the income is so ludicrous that is should be ignored without any further waste of time. But if the case study is conducted by an economists of Harvard, it warrants a reading.

The main framework economists use to think through tax policy supposes
that when a government needs to raise tax revenue, it wants to spread
the burden of taxes among its citizens in the least painful way,
Weinzierl says. In other words, the government wants those for whom it
is relatively easy to earn money to pay more in taxes than those for
whom it is difficult.

"The problem is this: The government can't tell whether it is easy or
hard for a given person to earn income, because it can't measure
'ability.' What the government can measure is income, so it
tends to tax income. But when the government taxes incomes, it
discourages people from working as hard as they otherwise would have
worked.

"The holy grail of tax policy, according to this framework, is a fixed
and observable measure of ability," Weinzierl continues. "That is where
height comes in. It turns out that each inch of height is associated
with about a 2 percent higher wage among white males in the United
States. Wage is one measure of ability, since it measures how much
someone can earn in an hour of work. Therefore, if height is taxed, you
are taxing ability directly, so you can cut the economic pie more
equally without it shrinking."

Intuitively I do not agree with the above logic. However, it is evident that to measure 'the ability to earn' is not an easy task. And use of any proxy such as the income or the education level can only lead to a trade off where more equally a government tries to slice the economic pie, the smaller it will get.

It makes me ponder if a way to measure the 'ability' will make it easier for the companies to recruit people.

09/09/2009

When it comes to the praise and recognition, managers and their reports have two different opinions, as the former feels ample is being provided and the latter thinks it is absent. Any manager runs a risk of demotivating their employees by not showering enough praises. At the same time the question which we ask ourselves as a manager is, if it is possible to praise excessively and run a risk of sub-optimal performance. Usual answer to such questions lies in finding the right balance. According to Gallup data, the key to effective recognition is that it be honest and based
on outcomes that are measurable. They suggest that once every seven days is optimum.

“Once every seven days, all employees should be
individually recognized or at least told that they have done a good job
or that they have set a record. And you can never give too much
recognition if it is honest and deserved.” - Rodd Wagner and James K.
Harter, 12: The Elements of Great Managing

This is probably a good way to monitor that we do not miss on this crucial aspect. However, I am not convinced that the answer lies in the 'number of times'. I believe what counts is authenticity. A veracious praise once a month is more effective than four ritualistic praises. To implement this, a leader has to be genuinely interested in his/her people and be an intent observer to catch them doing the right things.

09/08/2009

I picked up a book titled Brainwashing,The Science of Thought Control from a local library without knowing what to expect. Majority of the book covers technical aspects of the brain functioning and brainwashing (and how to avoid being brainwashed), which I skimmed past. However, I did find some useful information in the neuroscience section where the author elucidates the reasons behind brain change, beliefs, emotions, how brains generate actions, self-control, and free will. Author poses some intriguing questions such as, 'does the feeling of an emotion comes first and trigger the bodily responses, or is it the other way round?'

In communication we know the importance of stories and metaphors due to its powerful impact and the ability to connect with the recipient of the message. The reason is mainly because the signals from strongly connected neurons travel faster than loosely connected neurons. And one of the reasons for the strong connection is the 'feeling of emotions' generated during the story-telling. Emotions create stronger bonding because during the 'feeling of emotions' interaction between body and brain takes place.

Why do we tend to remember simple messages more than the complex ones? Because simple ideas with a few components form simple connections, which are stronger than the complicated connections.

Overall, the book is an interesting read to understand the most important organ in our body, which still remains a mystery to the science, and the author rightly suggests it to be a traitor in our skull.

09/04/2009

There are two ways to study the current recession - either to cast it as an accident, mishap, or misfortune and try to recover from the shock by using all possible therapies available and forget about it following recuperation. Or it can be likened to any natural cataclysmic event, such as storm, earthquake, tsunami, or forest wildfire, which are nature's way of cleansing the system and creating stronger subjects. Werber, global CEO of Saatchi & Saatchi, believes that recessions are like forest wildfires - a rush of destruction that affects everything in their path.

In a forest fire, destruction leads trees to adapt better for future fires by developing characteristics like self-pruning, thicker barks, and deeper roots. Similarly, companies need to look at a recession as an opportunity to lose all the flab, find its true purpose, and develop staff to engage them in the purpose of the company. Companies also need to understand that the playing ground post-destruction will be different. Consumers demand will not be the same. The companies which can foresee the changed scenario will be better placed than their rivals. Pepsico, the world's leading soda-producer, shifted its focus to healthy products - Quaker Oatmeal, Tropicana juice - from its soda based products, sensing the changing consumer preferences.

Thus, recession makes companies aware of their inefficiencies, teaches them to be better prepared and makes them change proactively. And the result of this recession will not only be destruction, but a leaner and more efficient group of survivors.

09/02/2009

We have all heard the advice that if you find your passion then you never have to work. Finding passion is easier said than done, but is worth the search. Methods range from reflecting back on your school days to listening to your heart. However, various loose definitions of passion have resulted in many people mistaking their extra-curricular activities or past time hobbies as their passion, thereby not striving to find their real passion which necessarily requires sacrifices and willingness to take risks. I have found a couple of advices very useful on this subject, one of which from Steve Job's Stanford University Speech:

Your time is limited, so don’t waste it living someone
else’s life. Don’t let the noise of others’ opinions drown out your own
inner voice.

You have to trust that the dots will somehow connect in your future.
You have to trust in something – your gut, destiny, life, karma,
whatever.

This approach has never let me down, and it has made all the
difference in my life.The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle.

Being the richest man in the cemetery doesn’t matter to me. Going to
bed at night saying we’ve done something wonderful, that’s what matters
to me.

When we choose a goal and invest ourselves in it to the limits of our concentration, whatever we do will be enjoyable. And once we have tasted this joy, we will redouble our efforts to taste it again. This is the way the self grows.

A flow activity (can be read as passion activity), whether it involved competition, chance, or any other dimension of experience, had this in common: It provided a sense of discovery, a creative feeling of transporting a person into a new reality. It pushed the person to higher levels of performance.

What is the common thread? It is the willingness to take risks and make sacrifices. It is exhilarating to come closer and closer to self-discipline.

09/01/2009

Behavioral economics has always been influential in shaping managers' decisions. Findings by the behavioral economist, Dan Ariely, in his book Predictably Irrational gives three different pricing tools to managers.

1) CONTEXT:

“most people don’t know what they want unless they see it in context.”- Dan Ariely – Predictably Irrational

Offer customers three options at different price levels - the middle one being the one you want them to buy. This helps the customer to compare and decide within the context.

2) DECOY:

Decoy pricing is giving customers three choices; 1) The product you want them to buy at the price you want them to buy, 2) A slightly inferior product at a slightly lower price (the decoy), and 3) a similar product but not quite the same as what the customer wants.

You know the customer won’t choose option (3)
and you don’t want them to choose it anyway. You include this choice in
the mix for two reasons, to give the customer a third choice and to
focus the customer on the choice you want them to make between option (1) and (2).

Why do this? Ariely found that people...

“tend to focus on comparing things that are easily comparable, and avoid things that cannot be compared easily.” And remember, “people don’t know what they want unless they see it in context.”

Offering customers three choices allows them to put things in context. Ariely also surmised that decoys
help people make decisions, and his experiments showed that when faced
with a decision between two similar products people will most often
choose the slightly better product, even if it costs slightly more.

3) ANCHOR:

Ariely found that “once we buy a new product at a particular price, we become anchored to that price. But price tags by themselves are not necessarily anchors. They
become anchors when we contemplate buying a product or service at that
particular price. That’s when the imprint is set. From then on, we are
willing to accept a range of prices but as with the pull of a bungee
cord, we always refer back tot he original anchor. Then the first
anchor influences not only the immediate buying decision but many
others that follow.”

So the strategy should be to set the anchor at higher levels.

What is striking in all of the above three findings is that they contradict the conventional wisdom of value pricing, where the customer is assumed to be a better judge of value of a product or service.

08/30/2009

I have just
finished reading ‘The Ultimate Sales Machine ’ by Chet Holmes, which has several
high-octane suggestions on sales. There is nothing new in the suggested sales
steps, which may be put differently by different authors but it follows the same
steps of rapport building to need creation to value offering to desire building
to removing objections to closing the sales and then follow-up. The suggestions,
which are different from the other books, are the importance of and
how to hold internal workshops for setting up a sales strategy, implementing new
sales policy, and providing training to sales staff. Suggestions on marketing
and presentations are similar to many other books on the stands except that
the pace of Chet is much faster and adrenalin driven. I found his method of
recruiting sales people interesting but I am doubtful. There are a few
valuable tips to take away from this book but the bottom line approach of
an extremely aggressive selling approach may not be suitable for all types of
products or services.